In re Pittman, Bankruptcy Appeal No. 80-M-1522.
| Decision Date | 23 January 1981 |
| Docket Number | Bankruptcy Appeal No. 80-M-1522. |
| Citation | 8 BR 299 |
| Parties | In re Ned Thomas PITTMAN and Peggy Sue Pittman, Debtors. In the Matter of FIRST NATIONAL BANK OF NORTHGLENN, Plaintiff, v. Ned Thomas PITTMAN and Peggy Sue Pittman, Defendants. |
| Court | U.S. District Court — District of Colorado |
Kirk P. Brady, Denver, Colo., for plaintiff.
Carol B. Million, Denver, Colo., for debtors/defendants.
This is an appeal by the First National Bank of Northglenn (Bank) from an order of the bankruptcy court dismissing a complaint for relief from the automatic stay of lien enforcement on the ground that the Bank was adequately protected by the payments to be made in performance of the debtors' Chapter 13 plan. Because that decision is premised on an erroneous interpretation of the Revised Bankruptcy Act, the order must be vacated and the matter remanded for further proceedings.
On or about July 6, 1979, the debtor, Ned Pittman, bought a 1979 Ford Custom Van automobile from O'Meara Ford Center under a credit sale agreement which obligated him to pay $17,731.80 in 60 equal monthly installments of $295.53 each, secured by a security interest in the vehicle. O'Meara Ford Center assigned the credit sale agreement and security interest to the Bank with an agreement to repurchase upon default.
Ned Pittman and his wife filed their Chapter 13 petition with the bankruptcy court on July 7, 1980. At that time the remaining balance on the credit sale agreement after rebate of pre-calculated interest was $11,560.46. The Bank promptly filed a proof of claim for that amount as a secured creditor and rejected the debtors' proposed plan.
The debtors sought confirmation of their plan by the "cram down" technique of asserting that the value of the vehicle was only $5,350.00 and that the plan payments constituted adequate protection for that amount under 11 U.S.C. § 1325(a)(5)(B).
The Bank filed its complaint for relief from the automatic stay of lien enforcement, resulting from the provisions of 11 U.S.C. § 362(a), by contending under 11 U.S.C. § 362(d) that the debtors had no equity in the vehicle and that the plan did not provide adequate protection for the security interest.
The bankruptcy judge combined the confirmation hearing with the hearing on the Bank's complaint for relief from stay. Ned Pittman testified that he was three months in arrears in making payments on the van; that he had another automobile which he drove to work; that his wife used the van to drive the children to school and to get groceries; that he had talked with the managers of two used car lots who valued the van at $5,500.00 and $5,200.00; and that those statements and the "Blue Book" were the basis for his estimate of $5,350.00 as the value of the collateral on the Bank's secured claim.
The Bank presented two witnesses who testified concerning valuation of the vehicle. The collection manager of the Bank said that the vehicle was in excellent condition and that he had received a written bid from O'Meara Ford Center to buy the van for $9,500.00 under the repurchase agreement. The second witness was a collection manager of a different bank who said that he had recently repossessed a similar van which the bank sold to a private buyer on bids for a cash price of $11,000.00.
The bankruptcy judge valued the vehicle at $6,000.00, which amount was found to be adequately protected under the plan which was confirmed by an order entered on September 24, 1980. On the same date, an order was entered dismissing the complaint for relief from stay on that finding of adequate protection for the security interest.
On this appeal the Bank asserts error in the determination that the value of the vehicle was $6,000.00. That is a finding of fact based on conflicting evidence and the finding must be accepted unless it is clearly erroneous. Bankruptcy Rule 810. There is no basis for such a determination here.
The Bank also claims error in the refusal of the bankruptcy judge to consider its claim that the vehicle is not property which is necessary to an "effective reorganization" as required by 11 U.S.C. § 362(d) (2)(B). The bankruptcy judge observed during oral argument...
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